Chip industry faces almost zero growth in 2001

Sales to rise no more than 1.2 per cent - analyst

The global chip industry's rapid expansion isn't merely slowing down - it will practically grind to a halt this year, a US market research company has predicted.

Industry players and watchers have been anticipating a slowdown this year, but even the most pessimistic predictions have thus far assumed double-digit growth.

The Semiconductor Industry Association broadly revised its outlook for 2001 to take growth down to around 17 per cent, down from the 22 per cent it previously said it was expecting and recently admitted was "unlikely" to be met. Motorola, meanwhile, said it foresees the industry's overall sales growing by between ten and 15 per cent.

During 2000, semiconductor sales grew by around 36 per cent.

However, for VLSI Research the prognosis is far worse. It now reckons growth will amount to no more than 1.2 per cent, down from the five per cent year-on-year increase it previously said it was expecting.

VLSI bases its prediction on its belief that the world's economic conditions will be much tougher than is widely thought.

"It's going to be tough year," said VLSI's president, Dan Hutcheson, cited by EBN. "The number one reason is that the economy is much sicker than people are predicting. I think the evidence is starting to look like we're in a recession."

Equally, the upturn in the second half of the year that some observers are hoping for isn't going to happen, according to VLSI. "Everyone is saying that things will turn around in the second half, but a lot of that is wishful thinking. If we get into a really hard macroeconomic climate it could be tough to pull out of it," said Hutcheson.